Brussels, 23/05/2006 (Agence Europe) - Presenting the annual report on the structure of taxation systems in the EU last week, Michel Aujean, Director of Analyses and Tax Policies at the European Commission, said, in the EU as a whole, the overall average tax burden had dropped by 0.2% in 2004, compared with 2003, to 39.3%. He pointed out that with economic growth twice as strong in 2004 as in 2003, the opposite should have happened. He said this modest fall in the tax burden, which principally prevents pulling down outgoings on “labour”, was not enough to ensure a future with strong growth and lots of jobs in the EU. Nonetheless he drew attention to the dramatic drop in taxation on low incomes (those less than two thirds of average income), which, he said was “excellent news”.
On corporate income tax, the report noted a significant drop in levels, but also a slowing down of this drop, said Mr Aujean, noting that in this area there was no convergence between the old and new Member States. He said that, despite the drop in these levels, tax “receipts had not stood still”. This should, he considered, go some way to calming the fears of some Member States of a “race to the bottom” which cannot be justified. What is the explanation? The trend towards widening the tax base which counterbalances the reduction in levels was being maintained, said Mr Aujean. The Commission and Member States are talking about the creation of a Common Consolidated Corporate Tax Base (CCCTB).
In Vienna, at the informal Ecofin Council, Member States indicated their preference for a wide base for deciding the taxation criteria for corporate taxes (see EUROPE 9171).